"Sorry, but the bread is all sold out."
At 4 p.m. on the 12th, a Paris Baguette store in Yeongdeungpo-gu, Seoul, was completely empty. A store employee explained, "At this time, there would usually be a variety of breads adequately displayed, but since the 11th, SK Telecom has started a 50% discount event for its membership customers, leading to product shortages."
Recently, SK Telecom has dramatically expanded membership discount benefits as one of the compensation measures for a hacking incident, intensifying the membership discount war among telecom companies. Analysts suggest that the subsidy competition for attracting subscribers from competitors is shifting to a membership competition aimed at retaining existing customers, triggered by the SK Telecom hacking incident. There are also interpretations that the competition among telecom membership discounts could stimulate consumption, leading to a second 'consumer spending recovery coupon' effect.
◇ SK Telecom's strategy to retain subscribers is 'membership discounts'
According to SK Telecom on the 14th, the company will hold a 50% membership discount event across all Paris Baguette stores for its customers from the 11th to the 20th of this month. This half-price membership discount is one of the compensation measures announced by SK Telecom on the 4th of last month following the hacking incident.
SK Telecom pledged to cut telecommunications fees by 50% in August, provide an additional 50 gigabytes (GB) of data monthly (from August to December), and offer 50% membership discounts at partnered companies like Starbucks, Domino's Pizza, and Paris Baguette (from August to December).
Notably, SK Telecom opted for membership discount cards instead of direct monetary compensation. An industry representative noted, "The monthly membership discount provided has likely been the best way to retain existing subscribers (home rabbits)," adding, "It seems the atmosphere in the telecom industry has shifted from competition to attract subscribers from other companies (wild rabbits) to competition to retain existing customers." According to the industry, about 720,000 subscribers left for other telecom companies between April 22, when the SK Telecom hacking incident became known, and July.
SK Telecom also held a 50% discount event at Starbucks from the 1st to the 10th of this month. After the Paris Baguette discount event ends on the 20th, the company plans to continue the half-price discounts at Domino's Pizza for ten days starting on the 21st. A representative from SK Telecom said, "The number of coupon downloads for the half-price discounts has significantly increased (following Starbucks and at Paris Baguette)."
◇ SK Telecom's marketing expenditure for membership discounts could reach 3 trillion won
SK Telecom will conduct half-price discounts for ten days each month with three partner companies until December. The 50% membership discount amount provided by SK Telecom is capped at 10,000 won per person, allowing for a maximum discount of 30,000 won per person each month. Assuming all of its approximately 22 million subscribers benefit from discounts over five months (maximum 150,000 won per person), the total marketing expenditure could reach 3 trillion won. This cost is reported to be shared with partner companies.
An industry representative stated, "SK Telecom is planning 15 half-price discounts by December, and if all customers utilize the discount coupons, the cost incurred could exceed 3 trillion won." He added, "Membership discounts will likely serve as a second consumer spending coupon to invigorate retail consumption."
◇ Intensification of competition for membership discounts among telecom companies
As SK Telecom significantly expanded its membership discount benefits, the competition for membership discounts among telecom companies has intens intensified. KT has been introducing discount coupons for dining brands such as 9,000 won for Goobne Chicken, 40% for VIPS, 60% for Papa John's, and 50% for Salad! (until the end of August) in a relay format every Tuesday. Starting this month, they have also begun distributing cash vouchers that can be used at Olive Young, Daiso, Naver Pay, and Starbucks every Wednesday. Alongside this, they have enhanced membership benefits focused on cultural events, such as inviting subscribers to previews of the musical 'Cirque du Soleil' and director Park Chan-wook's new film 'Nothing Can Be Done.'
In August, LG Uplus increased the number of partner companies for its membership program 'U+Plus' to 52. They have significantly strengthened benefits tailored for the vacation season, igniting the telecom membership war. LG Uplus is prominently featuring discounts for major theme parks and water parks, including 50% off at Ocean World, 40% at Busan Lotte World, 55% at Seoul Land, and 40% at Aqua Field. On the 20th, they plan to provide a 30,000 won discount coupon for accommodations listed on 'Yanolja'.
Both insiders and outsiders in the telecom industry are saying that due to the membership competition among telecom companies, the expected competition for subsidies following the repeal of the Device Distribution Improvement Act (The Act on the Improvement of the Distribution Structure of Mobile Communication Devices) has not occurred. A representative from one telecom company remarked, "As the leading company, SK Telecom is investing substantial resources in membership discounts instead of subsidies, which has weakened the competition for subsidies among telecom companies."